Understanding Apple’s Wearable Strategy

Someone who I believe has a good sense of Apple’s thinking about wearables told me some months ago that if I wanted to understand part of Apple’s wearable strategy I needed to go to Disney World. When I was at Disney World in Orlando recently, I tried to get a sense of what this person was talking about. While I had a great time with the family, I also spent quite a bit of time checking out the ID band technology Disney is using that is revolutionary for theme parks. I see now the most likely concept behind it represents one of the three key pillars of Apple’s future wearable device strategy.

When we arranged our Disney World vacation, booked our hotel on their property and bought our Disney World park passes, we had to register so we could use their wrist band ID program. That process included connecting the band to a master credit card we would use at the various parks. We had to enter a PIN number to use the bands at shops and restaurants. We also used them to get into our rooms instead of using key cards. Two weeks before we left for vacation, the individual wrist bands with our specific IDs came to the house.

The wrist bands themselves use RFID radios for communicating with door locks, restaurant terminals, park entrance gates, etc. The first time we entered one of the parks, we had to sync our bands to a fingerprint reader for double authentication and we used the band and fingerprint reader every time we entered the parks. When we wanted to use them at kiosks or any restaurants on the Disney properties, we used the band and a PIN number to pay for meals. We also used them to sign up for Fast Passes for rides and touched them to the Fast Pass terminal when we went to go on these rides. Bottom line is these bands were ultra convenient and worked flawlessly.

Since this was a major vacation for us, we also bought the Disney Memories picture package. When a park photographer took our photos, we would just have them “scan” one of our bands and they were instantly uploaded to our special Disney Picture site where we could download them at will. But these RFID bands also had proximity features so when we were on a ride like Splash Mountain where they take a picture of you as you start the downward slide, it automatically sensed from our bands we were on the ride and that picture was automatically sent to our Disney picture site as well.

We were told Disney spent over $1 billion dollars on the bands and infrastructure technology. It is deployed through all of their 47 acres in every one of their hotels, restaurants, parks and rides. At the moment, it is only available to those with Disney property packages but I understand they are looking at eventually using these bands for everyone coming to the parks in time.

As you know, Apple and Disney are very tight. Disney’s CEO Bob Iger sits on Apple’s board and Steve Jobs’ widow, Laurene Powell, sits on Disney’s board. There is no question in my mind Apple has gone to school on this band ID concept and we can expect this to be one of the key pillars of any wearable device Apple may some day bring to market. Although the rumors are of Apple doing an iWatch, I think that design idea is actually too limited. One design might be an ID band that might look more like a Nike Fuelband that tells time as well as counts steps and calories, but an additional feature would be as a wearable ID device and work much like Disney’s band. They could also do something like an iWatch that has a big screen and be feature rich. I imagine a band could be perhaps $99 while an iWatch, depending on memory and features, would be much higher.

Mobile Identity

I actually think the ID aspect of any wearable Apple brings out is probably central to its future functionality. This is speculative on my part but, after using the Disney band for seven days and seeing its incredible functionality, Apple has to be crazy not to make this part of any of their wearables. The ramifications for Apple’s future with this one ID implementation alone could make it a huge hit. Imagine going into a Starbucks and just touching your iWatch or iBand to the terminal, entering a PIN number and it is charged to your Apple account. Or to enter your house, you just touch the Apple wearable and enter a PIN number and your are in. Yes, you can do this with an iPhone now but that means taking it out of your pocket or purse and it is only single authentication at present. In a wearable, it is much easier to use for entering the home and for all types of interactions and transactions. Its convenience factor would be very compelling. I believe something like this would be very “sticky” and keep users of these tied closer to Apple’s ecosystem.

Apple also has the fingerprint reader that would bring even greater levels of security to any wearable. While using a PIN number for part of any dual authentication is acceptable, a fingerprint reader on transaction terminals and tied to door locks and other devices could provide the even better security people will demand if using a wearable since, like smartphones, these device could be stolen or lost. Being tied to a fingerprint for authentication would be critical to the acceptance of a wearable for these types of functions.

Apple would probably have to create something like HomeKit and HealthKit for commerce related transactions so those who make these transaction terminals can fine tune them for an Apple ID iBand or iWatch. This part of the concept would be the more difficult aspect to pull off since stores, restaurants or anyone doing a financial transaction may need to have new equipment to support this functionality.

Body

The second pillar I see as part of their wearable strategy is tied to HealthKit. This would allow these watches and bands to handle all types of health related monitoring and provide valuable health data to users and their health care providers. But unlike the basic health related functions in today’s health wearables, it is clear from Apple’s Healthkit that, over time, 3rd party vendors now have a platform for delivering much greater health monitoring features that can be embedded or uploaded to an Apple wearable as well as their iPhones. I have multiple health apps on my iPhone now but on a wearable, they would deliver much more precise data capture capabilities and be much easier to use for these purposes.

Home

The third pillar would be tied to HomeKit and applications created using it. As Tim Cook stated in his WWDC keynote, we will someday be able to tell our phones or tablets we are going to bed — it would turn out the lights, adjust the thermostat, lock the doors, and set the alarm. However, I could see Apple also adding this feature to an iWatch or iBand using proximity sensors to do the same thing — perhaps even faster. I personally would prefer having dual authentication on a digital door lock. The models out today that work with iPhones just take a wireless signal scan from the iPhone when it’s waved in front of it. But by adding a fingerprint reader to these locks, they would add a second, more secure form of authentication to an iPhone, iBand or iWatch when waved in from of them to unlock the doors to your home or office.

I believe when and if Apple does launch an iWatch or iBand or what ever form of wearables they bring to market, they will initially lead with the health and home automation apps first and over time add the ID features. As you can imagine, using an iWatch or iBand for ID that can be used to do transactions, lock doors and even handle proximity functions could be controversial without them first convincing people they can trust them even more than they already do today. That could take some time.

Any seasoned Apple watcher has to marvel at the overall technology platforms Apple has been creating for their devices that include new ways to use wireless technology, fingerprint readers, sensors, etc. It all seem to be laying the groundwork for many new types of products. While wearables may be Apple’s next disruptive technology that will help expand our digital worlds, who knows what else Apple has in store that will take advantage of these rich platform architectures over time.

In the end, I believe this element for use as a Personal Digital ID that can be tied to all types of applications may be the killer app for all of Apple’s wearable devices. Combine these three pillars together and I believe they could make up the feature set of an iWatch and/or iBand. This clearly could entice hundreds of millions of new users to Apple’s broader platform of devices and really change the way we interact with our bodies, homes and retail establishments in the future.

Everything I suggest in this column is my speculation on what I believe Apple may bring to market in a wearable. I have no knowledge of what they are doing but have been carefully studying the tea leaves around Apple’s current software and architectural moves and I suggest this could be the underlying applications of any wearable product Apple could do in the future.

If so, I believe Apple could have their next big hit on their hands and add a great deal of new customers to the Apple ecosystem.

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.